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This paper brings mechanism design to the study of conflict resolution in international relations. We determine when and how unmediated communication and mediation reduce the ex ante probability of conflict, in a simple game where conflict is due to asymmetric information. Unmediated communication helps reducing the chance of conflict as it allows conflicting parties to reveal their types and establish type-dependent transfers to avoid conflict. Mediation improves upon unmediated communication when the intensity of conflict is high, or when asymmetric information is large. The mediator improves upon unmediated communication by not precisely reporting information to conflicting parties, and precisely, by not revealing to a player with probability one that the opponent is weak. Surprisingly, in our set up, arbitrators who can enforce settlements are no more effective in reducing the probability of conflict than mediators who can only make non-binding recommendations.

This paper brings mechanism design to the study of conflict resolution in international relations. We determine when and how unmediated communication and mediation reduce the ex ante probability of conflict, in a simple game where conflict is due to asymmetric information. Unmediated communication helps reducing the chance of conflict as it allows conflicting parties to reveal their types and establish type-dependent transfers to avoid conflict. Mediation improves upon unmediated communication when the intensity of conflict is high, or when asymmetric information is large. The mediator improves upon unmediated communication by not precisely reporting information to conflicting parties, and precisely, by not revealing to a player with probability one that the opponent is weak. Surprisingly, in our set up, arbitrators who can enforce settlements are no more effective in reducing the probability of conflict than mediators who can only make non-binding recommendations.

The paper models the practice of charging bribes for faster delivery of essential services in third world countries. It then examines the possibility of curbing corruption by supervision, and secondly, by introducing competition among delivery agents. It is argued that a supervisory solution eludes the problem because no hard evidence of the reduction of corruption can be established for this type of offenses. It is also shown that using more than one supplier cannot eliminate the practice, and the bribe paying part of the market attains a determinate proportion as the number of suppliers increases. However the bribe rate and average waiting time come down at a diminishing rate with increase in the number of suppliers, and this property can be used to determine an optimal number of suppliers.